Sprint-Clearwire flop will hamper WiMAX
In ditching its arrangement with Clearwire to develop a national WiMAX network across the US, Sprint Nextel has delivered a big setback to companies selling related equipment.
So says Tom Elliott of Strategy Analytics, commenting after complexities in the project led to the companies terminating their agreement on November 9.
“The deal falling through definitely retards development in North America but overall I think WiMAX will survive,” Elliott commented.
Following the move, Sprint is saying publicly that it “remains fully committed to developing WiMAX services and deploying a WiMAX network that will allow customers to realize the benefits of mobile broadband Internet”.
Elliott, however, doubts that this commitment will turn into the national network it had announced plans to build with Clearwire as recently as July.
“I don t think they'll pull the plug on it entirely, as they've gone a little far down the path,” he said. “They will continue with the product, but I'd be surprised if it rolls out as aggressively as they were originally intending.”
Consequently, the demand for WiMAX equipment will diminish, particularly affecting makers of home-use products, according to Elliott.
“They definitely are not going to be in as many houses as they were hoping to in the next 18 months,” he said.
The delay could see WiMAX technology fall through the gap between existing Wi-Fi technology and long term evolution (LTE) of third-generation mobile phone standards in the US. However, Elliott says the technology will still be of great importance in developing countries.
“The big advantage was really time. WiMAX has got, by some estimates, a 1-2 year head start on LTE,” Elliott said. “In the US It doesn't have an "˜If you want to do it, WiMAX is the only way to go' advantage.”
“In the developing world, there is [that advantage],” he continued. "You can't put copper in the ground because it's going to get stolen tomorrow. Fibers, it's all ridiculously expensive, so wireless makes a lot of sense there.”
The cancellation of the deal also has a lot to do with the political environment following the departure of Sprint Nextel s former CEO Gary Forsee, a strong backer of the WiMAX project. His commitment to the Clearwire collaboration through a period when Sprint and Nextel were struggling to integrate was called into question by activist shareholders.
“Advocating strenuously for the Clearwire joint venture probably became a more high-risk career move in the last couple of months,” Elliott commented. “There is a less than totally enthusiastic contingent within Sprint and apparently within their shareholder base about WiMAX.”
